How Do MSP Solutions Cut Costs and Promote Cost Savings?


Managing contingent labor is very different than managing HR for full time workers for a number of critical reasons. Perhaps your organization is leaning on contingent resources to address cyclical or seasonal peaks and valleys. Or maybe you have periodic need for talent in specialized areas or you have frequent short-term staffing needs that would not be appropriate to fill with full time workers. Whatever the case, it can be complicated to manage multiple, specialized staffing vendors and the budgeting process that goes with it. In any of these cases, the Managed Service Provider or MSP could be just the solution you need to capture cost savings in the management of contingent workforce resources.

Managing contingent staffing suppliers is typically not a core competency for many organizations and can pose a significant drain on HR departments’ time and resources. This leads to inefficient use of labor spend and man-hours dedicated to this parallel HR process. This is why so many contingent workforce programs leverage the power of MSP services. MSP services have proven effective at delivering the needed expertise while simultaneously keeping associated costs in check. Here are some of the main ways MSPs drive savings.

MSPs typically deliver hard cost savings of as much as 15% by increasing hiring efficiency and dramatically reducing fill times for open positions. Moreover, the spend visibility enabled by the use of an MSP service helps ensure you’ll pay suitable market rates for the talent sourced by the program. These days, many companies engage contingent labor to fill more than a quarter of their overall workforce needs. So hard cost savings driven by the MSP can represent a significant number.

There are also many soft cost savings benefits to using an MSP for contingent labor management. Not least of which is an estimated 10% in overall workforce management administrative spend derived from the reduction in procurement, HR and management activity experienced by organizations leaning on an MSP solution. An MSP also helps reduce employment related costs by lowering turnover rates and overtime expenses through more experienced management of contingent resources.

Other notable soft cost savings benefits are captured by the greater visibility and control an MSP delivers to its customers. Typically, an MSP helps clarify staffing vendor usage and performance while also improving hiring and management processes and workflows which improve overall workforce management operations. At the same time, the MSP for contingent labor ensures consistency in quality, service, performance, pricing and terms while providing one, consolidated invoice for all the services provided.

SIA research suggests deploying a MSP for contingent workforce management can save a client company as much as 20% overall on contingent staffing and placement fees when compared year over year, to operations without a MSP solution. If you’re ready to explore how to capture all the aforementioned savings and more through implementing a MSP solution for your organization, we can help. Set an appointment today to discuss options with a nextSource MSP expert.

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